Dealers testify their customers can’t afford a new 70¢ to $1.00 tax on heating fuel

Get short shrift from Senators

At the end of the fifth week of the legislative session, the Senate Natural Resources & Energy Committee currently working on the Clean Heat Standard bill, S.5, decided to hear testimony from Vermont fuel dealers – the businesses that will be most negatively impacted by the law, should it pass. While activist groups such as the Energy Action Network, VPIRG, the Conservation Law Foundation enjoyed ample time to make lengthy, often duplicative, presentations – some appearing multiple times -- eleven heating fuel dealers were allotted six minutes each to make their case.

If this wasn’t stacking the deck hard enough, the first fuel dealer on the list to testify was Brian Gray of the Energy Co-Op. Although neither Gray nor members of the committee mentioned this fact, it is important to know that Gray was the Speaker of the House’s hand-picked person to “represent” the fuel dealers on the Vermont Climate Council, despite his business model being very different from most if not all others in the industry. Gray served for one term on the council from its inception in 2020 until October 2022, and during his tenure the council wrote and recommended that the legislature adopt the Clean Heat Standard.

Even so, Gray presented a cautionary tale about the realities of what the Clean Heat Standard proposes to do in terms of strong-arming Vermonters into switching from fossil fuel heating to electric.

Gray explained that the upfront costs of installing a cold climate heat pump system run from $5000 to $20,000, and the weatherization that often needs to accompany that installation can add another $5500 to $15,000 to the bill. And, said Gray, “The payback periods are long. There’s no doubt there’s savings, but the paybacks are way out there,” and most Vermont households cannot afford these upfront costs.

Gray also noted that, “In today’s market we’ve seen a real slowdown in these services over the last few months because early adopters have already installed systems, leaving a smaller pool, disposable income has shrunk considerably due to significant cost of living increases, and the federal Inflation Reduction Act has caused a lot of buyers to delay purchasing until they understand what the rebates are and they’re in place.” 

Ironically, a point raised by multiple witnesses, the popularity of heat pumps in Vermont, such as it is, is driven not by their ability to warm in the winter (something they are not yet very good at), but rather their ability to provide air conditioning in warmer months – a phenomenon likely to drive up electricity usage and electric bills.

Because cold climate heat pump technology is not yet at the point where it is effective and efficient in the coldest Vermont winter weather, none of the dealers recommend removing an existing fossil fuel heating system when installing heat pumps. The heat pumps require a backup. But this creates a situation raised by Dennis Percy of Fred’s Energy, who services over 15,000 customers in the Northeast Kingdom. Percy has many lower income customers who have trouble covering the cost of maintaining one heating system. The ongoing expense and complication of keeping two home heating systems in working order is another aspect of this scheme that will be financially out of reach for a lot of people.

Anthony James of James Plumbing & Heating raised the alarm about the harm a potential 70¢ to $1.00 per gallon tax on home heating fuel would cause to their customers, as well as the many small, family-owned businesses in the fuel delivery industry. “It’s not fair to make the fuel dealers shoulder the cost of funding this program,” with a price tag that will run into the billions of dollars, said James.

Senator Mark MacDonald asked James what the legislature should do to help with the high cost of fuel. James responded, “Not to add a tax.” MacDonald didn’t seem to like that answer so asked again. James said, “Try to get the prices down…. Adding a tax is not going to help [Vermonters].” What do we do? MacDonald asked one more time. “Definitely don’t add a tax,” said James. MacDonald threw up his hands in frustration.

Rob Stenger of Simple Energy had different answer for Senator MacDonald. “I have a litany of suggestions for you, unfortunately none of them are in support of S.5.” Stenger said the solution for lowering the cost of fossil fuel in Vermont is for the legislature to make it less expensive for businesses – not just fuel businesses, but all businesses -- to operate here.

“As a business owner that operates in the state of Vermont, owns property in the state of Vermont, has storage assets in the state of Vermont, and owned a business in Vermont that we subsequently closed,” said Stenger, “you could help us by making it less expensive to business in the state of Vermont. And that’s a universal statement. I operate two companies in both Vermont and New Hampshire. I have experience running a company in the state of Maine. Vermont is by a wide margin more expensive for everything [emphasis in original] to run a small business.”

Stenger, Gray and James as well as others all echoed the point that the labor force does not exist in Vermont to do the work of weatherizing homes and installing new heating appliances on the scale that the Clean Heat Standard calls for.  A lot of the installers of heat pumps are not well trained, said James, and service for maintaining the existing systems is already stretched. Gray and Stenger testified that they have had opportunities to grow their businesses, but couldn’t take advantage because the workers aren’t there to do the work.

Manny Fletcher of Fyles Brothers, who is also president of the Vermont Fuel Dealers Association, was blunt in his request that the legislature stop the attempt to pass S.5. Fletcher insisted S.5 “will do nothing but create hardship for rural Vermont residents…. It’s going to make you feel good about trying [to stop climate change], but it’s not going to make a difference.”  

Fletcher warned that S.5 will put a lot of the smaller fuel dealers out of business, and when that happens there won’t be infrastructure in place to service the fossil fuel backup systems the electric systems need on cold winter days. “People are still going to have their propane generators, but you’re not going to have enough companies to service them.”

Going out of business is a very real fear for Judy Taranovich of Proctor Gas and Vickie Haskins of Haskins Gas Service. “This feels like discrimination toward the small dealers,” said Haskins, who worries about her 6000 customers, many of whom are middle-income Vermonters having to choose between groceries and heating fuel these days. “I don’t know how we’re going to survive this.”

Taranovich said, “In my opinion this is the Unaffordable Heat Act. And it’s really the Unaffordable Heat Mandate. Adding a tax of 70 cents per gallon and reducing the CO2 emissions by a non-detectible global amount may make sense for you, but not for me. I won’t help you put me out of business. I have 12 employees. You will put me out of business with S.5.”

Fletcher concluded his remarks by telling the senators that he is hearing from his customers that they are not in favor of this bill, and that they can’t afford what’s coming at them if it passes. “We tell them to contact you,” said Fletcher, “but a lot of them don’t feel comfortable doing that…. Are you listening to the people [in your districts]? Because they are telling us that they are not for this.”

When the fuel dealers’ time was up the senators took a short break before Neale Lunderville, President, Vermont Gas Systems, which stands to rake in significant revenue from the clean heat credit system that would be established by S.5, took the witness stand for the second time during this process and was given another thirty minutes to have a leisurely conversation about why he thinks the Clean Heat Standard is a good idea.

• Rob Roper is a freelance writer with over twenty years experience in Vermont politics and policy.